PAL’s GE engine deal deepens $7.3-B Dreamliner fleet renewal push

Insider Spotlight

• Philippine Airlines is set to announce a deal with General Electric Aerospace to supply engines for its 15 firm-order Boeing 787-10 Dreamliners, with options for five more aircraft.
• Based on Boeing list prices, the engine package for the firm-order aircraft could carry a theoretical value of as much as $1.46 billion before customary discounts.
• The agreement advances PAL’s long-haul fleet modernization program after its landmark Boeing widebody order announced earlier this year.

Philippine Airlines (PAL) will announce shortly a major engine supply agreement with General Electric Aerospace for the carrier’s new fleet of Boeing 787-10 Dreamliners, marking the next milestone in its widebody fleet renewal program, company sources told InsiderPH.

The deal covers engines for PAL’s 15 firm-order Boeing 787-10 aircraft, with provisions expected to extend to the airline’s options for five additional jets. The aircraft are scheduled for delivery between 2031 and 2034 under PAL’s previously announced purchase agreement with Boeing.

Why it matters

The engine selection effectively completes the aircraft procurement package for PAL’s largest fleet modernization initiative in years, allowing the airline to move forward with detailed planning for maintenance, pilot training, spare parts provisioning and long-term support.

Boeing valued PAL’s firm order for 15 Dreamliners at approximately $7.3 billion at list prices, a ranking airline official told InsiderPH, although commercial aircraft transactions are typically completed at substantial discounts.

Industry estimates indicate that aircraft engines account for as much as 20 percent of a commercial jet’s list price, implying that the GE engine package for the firm-order aircraft could carry a theoretical list value of up to $1.46 billion before customary discounts.

If PAL exercises its options for five additional Dreamliners, the total engine package would be larger.

The Boeing 787 family is powered exclusively by either GE Aerospace’s GEnx engine or Rolls-Royce’s Trent 1000, making the airline’s engine selection one of the most closely watched aspects of any Dreamliner acquisition.

The big picture

PAL announced in May that it would acquire up to 20 Boeing 787-10 Dreamliners as part of its strategy to expand long-haul capacity while improving fuel efficiency and reducing emissions. The new aircraft will replace aging widebody jets and support future international network growth.

The airline has said the Dreamliners will deliver better operating economics and greater passenger comfort on long-haul routes, strengthening the flag carrier’s competitiveness across Asia-Pacific, North America and other international markets.

The forthcoming GE agreement also establishes a long-term partnership that typically extends beyond engine delivery to include maintenance, repair and overhaul services, technical support and performance monitoring throughout the engines’ operational life.

With both the aircraft and engine suppliers now in place, PAL’s fleet renewal program moves into its implementation phase ahead of the first scheduled deliveries in 2031.

— Edited by Daxim L. Lucas